IFAs increase use of ETFs to tap diverse asset classes

IFAs are increasingly using ETFs to gain exposure to a wide range of asset classes, including fixed income and commodities, as investors become more aware of the benefits ETFs offer.

Church Hill Finance principal Anthony Badaloo says ETFs are the most effective tool available for accessing diverse asset classes, which is one of their primary uses.

He says: "ETFs are also more adaptable for a dynamic landscape. They can be the most efficient way to achieve a balance in asset allocation. Investors are becoming more aware of them and more confident using them."

He adds: "There's also a lack of traditional funds keeping up with the benchmarks, let alone outperforming."

Brunning Newman Houghton director David Brunning says: "Our use of ETFs has increased, as they are a cost-effective way of accessing specific areas of the market.

"Our clients are interested in oil and bullion, for example, which are otherwise hard to access through traditional collectives."

He adds: "We are ahead of the curve in considering ETFs. IFAs should consider such routes to market, prompted by the Retail Distribution Review."

A survey by iShares shows advisers are increasingly adopting ETFs to tap a broader range of asset classes, with 60% of advisers using them to gain exposure to international, domestic and emerging equity markets.

The survey shows 32% access fixed income and commodities markets through ETFs, while 76% use ETFs as a core part of their market exposure or for strategic asset allocation.

iShares head of Northern Europe David Gardner says: "The survey findings show advisers are branching out from the traditional equity usage of ETFs into a broader variety of asset classes such as fixed income and commodities.

"This indicates they are now more familiar with the usage and implementation of ETFs, whether as a tactical tool or, as is increasingly evident, as a core part of their investment strategy."